Employment Law – When being reasonable is not enough: Waltham Forest LBC v Omilaju and Constructive Dismissal

Christopher Camp considers the Court of Appeal’s November 2004 decision on ‘the final straw’ doctrine in constructive dismissal cases, in particular the suggestion that the final straw need not be an unreasonable act.

All employment practitioners are familiar with the ‘last straw’ doctrine in relation to constructive dismissal: the idea that an act by an employer, comparatively minor in itself, may entitle an employee to resign and claim unfair dismissal where that act is the last in a series of acts which, cumulatively, amount to a breach of the obligation of trust and confidence between employer and employee. One would have thought that the legal ground in this area was so well trodden that no one, least of all the EAT, would get it wrong. Yet in London Borough of Waltham Forest v Fomu Omilaju [2004] EWCA (Civ) 1493 (11/11/04), according to the Court of Appeal, the EAT did just that.

There is little to be gained from a detailed consideration of the facts. In summary, the relationship between Mr Omilaju and his local authority employer was a troubled one. After particular action by the employer which he perceived as discriminatory victimisation, Mr Omilaju resigned claiming (amongst other things) unfair constructive dismissal. He made this claim on the basis that the employer’s treatment of him ‘was the last straw in a series of less favourable treatments that [he had] been subject to over a period of years’. Following an eight day employment tribunal (‘ET’) hearing, his claim for constructive dismissal was dismissed.

The ET’s judgment was long and detailed. The EAT decided it was inadequate in so far as it dealt with the question of whether or not Mr Omilaju was constructively dismissed. The EAT remitted that question to a different ET.

The reason for the EAT’s decision is somewhat obscure. Clearly endeavouring to be as polite as he could, Dyson LJ, giving the judgment of the Court of Appeal, stated, ‘I have not found is easy to ascertain the basis upon which the EAT did allow the appeal in this case’. For present purposes, however, it does not really matter why the EAT reached the decision it did. The significant thing about Mr Omilaju’s case is what the Court of Appeal had to say about what can and cannot constitute a ‘last straw’ in constructive dismissal cases generally.

Dyson LJ emphasised, referring to the House of Lords’ decision in Malik v BCCI [1998] AC 20, that the question of whether or not something damages the relationship of trust and confidence must be ‘looked at objectively’, i.e. neither from the employer’s nor the employee’s personal point of view. He also underlined the fact (quoting from the judgment of Glidewell LJ in Lewis v Motorworld Garages [1986] ICR 157 at 169) that, ‘the last action of the employer which leads to the employee leaving need not itself be a breach of contract’. These matters were particularly important in Omilaju because the ET’s judgment had included this, ‘[Mr Omilaju] has to show that there was serious breach of his contract; or a breach that was the last in a series of breaches …. The difficulty for [Mr Omilaju] is that looked at objectively the straw that broke the camel’s back was perfectly reasonable and justifiable conduct of his employer acting fully in accordance with the terms of [Mr Omilaju’s] contract’ and the EAT judgment included the following: ‘in all “last straw” situations, matters turn to some extent on the perception of the employee at the time he feels he has been treated unreasonably or unfairly by his employer.’

The meat of the Court of Appeal’s decision was concerned with the narrow question of whether or not the act allegedly constituting the ‘last straw’ had to have any particular attributes, e.g. had to be unreasonable in some way, in order for there to be a constructive dismissal. On this, the Court had a number of things to say:

• ‘although the final straw may be relatively insignificant, it must not be utterly trivial’;
• the act constituting the final straw in a series of acts ‘does not have to be of the same character as the earlier acts’;
• the final straw must ‘contribute something’ to the breach of the implied contractual term of trust and confidence, ‘although what it adds may be relatively insignificant’;
• ‘the final straw may not always be unreasonable, still less blameworthy’ conduct on the employer’s part;
• ‘some unreasonable behaviour may be so unrelated to the obligation of trust and confidence’ that it contributes nothing to a breach of that obligation and therefore cannot be relied on by the employee as the foundation of a constructive dismissal claim;
• ‘If the final straw is not capable of contributing to a series of earlier acts which cumulatively amount to a breach of the implied term of trust and confidence, there is no need to examine the earlier acts to see whether the alleged final straw does indeed have that effect. Suppose the employer has committed a series of acts which amount to a breach of the implied term of trust and confidence, but the employee does not resign his employment. He cannot subsequently rely on these acts to justify [sic] a constructive dismissal unless he can point to a later act that enables him to do so. If the later act on which he seeks to rely is entirely innocuous, it is not necessary to examine the earlier conduct in order to determine that the later act does not permit the employee to invoke the final straw principle.’;
• ‘An entirely innocuous act on the part of the employer cannot be a final straw even if the employee genuinely, but mistakenly, interprets the act as hurtful and destructive of his trust and confidence in the employer.’;
• ‘It will be an unusual case where the final straw test is satisfied and the conduct relied on has been judged objectively to be justified and reasonable conduct’.

None of this is particularly controversial. However, whilst one can understand why the Court of Appeal went into the issue in such depth and whilst the judgment of Dillon LJ is, to an extent, a helpful restatement and summary of the law, there is a danger that it has been made, or been made to seem, much more complicated that it is. As a general rule, the more complicated something is or appears to be to an ET, the more likely the ET is to get it wrong.

The test an ET has to apply is simple: did the employee resign as a result of an act that by itself amounts to, or a series of acts that cumulatively amount to, a breach of the implied term of trust and confidence. The test needs no gloss put upon it. Unfortunately, Dillon LJ’s judgment is likely to be turned by some into a checklist that has to be gone through in every case, with appeals being made on the basis that, in any given case, the ET missed this or that point on the list. Moreover, ‘last straw’ is not a term of art and the more the courts go on about it and seek to define it, the more it can be made to seem like one. The phrase is just a label put on whichever is the most recent of the series of acts relied on by the employee.

One of the arguments put forward on Mr Omilaju’s behalf was that the ET, by relying, as above, on a finding that his employer’s conduct was perfectly ‘reasonable and justifiable’, got the law wrong because, by implication, the ET was suggesting that reasonable and justifiable conduct could never amount to a last straw. The Court of Appeal resisted (as the EAT did not) the temptation to make that implication in the particular circumstances of Omilaju. There is, though, no reason why it could not be made by the EAT in a similar case in the future, leading to the EAT overturning that future ET’s decision. Presumably, the idea behind the Court of Appeal laying down detailed guidance is to clarify the law and reduce the number of appeals from ETs. But ETs will often express themselves in the same sort of way as the ET in Omilaju expressed itself and the Court of Appeal’s decision in the case may well lead to more appeals, not fewer.

If an ET wishes to make a finding of fact that, viewed objectively, the alleged final straw relied on by the employee is, to use Dillon LJ’s phraseology ‘entirely innocuous’ and ‘contributes nothing to the breach of’ the obligation of trust and confidence, it will have to chose its words with considerable care. Most people describing the alleged final straw in this situation would be tempted to say something along the lines of ‘the employer did nothing wrong’. If an ET uses those or similar words, the employee may well have an appeal because the law is, apparently, that an employer can act entirely reasonably and still, to coin a phrase, ‘commit a final straw’.

If I were to say to the average businessman employer that it is possible for him constructively to dismiss one of his employees by acting in an entirely reasonable and justifiable fashion, he would reply that the law’s an ass. I would have considerable sympathy for him. How is one supposed to advise an employer in this situation? Telling him that so long as he acts reasonably, he will be all right would now be bad advice. Perhaps he should be told to be not merely reasonable but extra specially nice?

Dillon LJ’s suggestion that ‘It will be an unusual case where the final straw test is satisfied and the conduct relied on has been judged objectively to be justified and reasonable conduct’ is, then, unhelpful. He would have made life a lot easier for everyone if hadn’t used the word ‘unusual’ and had used something like ‘one-in-a-million’ instead.